Tilray Inc., a Canadian cannabis business, has its sights set on the US pot industry. Tilray stated on Tuesday that it has decided to purchase convertible notes from MedMen Enterprise Inc., a marijuana corporation based in the United States. If marijuana is fully legalized in the United States, the transaction might give Tilray a road to owning MedMen.
In an interview with CNN, Tilray Chief Executive Irwin Simon said that the funding the company is declaring in MedMen bonds today is amongst the most established markets in the $80 billion U.S. legal cannabis industry, and it is a critical step toward facilitating Tilray to steer the American market.
As cannabis is currently illegal under federal law in the United States, Canadian cannabis businesses prefer to buy stock shares that can be converted to possession in the case of a change in US legislation.
Tilray has merged with longtime competitor Aphria, claiming to be the world’s biggest marijuana retailer by income. MedMen was indeed a popular stock initially in the cannabis trading boom, but it has struggled in the past few years with enormous losses, to the extent that it had to sell its shares. The corporation’s book value was less than $220 million on Tuesday, down from more than $610 million in 2020.
For the past 17 months, MedMen’s senior management has been implementing a focused restructuring plan, according to Tom Lynch, CEO of MedMen.
We are grateful to our stakeholders for their patience and support as we worked to fix the business and rebuild trust and credibility.
A group of investors bought $165 million in warrants and notes from funds linked with Gotham Green Partners in order to save MedMen from a shortage of funds. If convertible, the notes will constitute around 21% of MedMen’s equity.
Tilray also plans to offer 9 million share capital to Gotham Green as part of the deal, although that aspect is contingent on stockholders accepting the issuance of additional stocks in a future vote; otherwise, Gotham Green would get cash.
Despite the fact that cannabis businesses in Canada have been legal for nearly 3 years, they are still losing money. Let’s see how this choice of Tilray affects their chances of becoming a US Cannabis market ruler.